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If you’re a DC First Time Home Buyer, we understand how overwhelming the process can be; But it doesn’t have to be if you simply follow the steps below.
In this article, we’ll break down the eight steps to homebuying and how you can build a strong team that will ensure you have a great experience throughout the process.
Skip the reading and schedule a call with one of our buyer agents today!
Steps for the DC First Time Home Buyer
- Decide You Are Ready to Buy
- Build Your Team
- Agent
- Lender
- Apply for a Loan
- Complete a Buyer Consultation Call and Sign Buyer-Agency with Brokerage Compliance Documents
- Look at Homes
- Submit an Offer
- Conduct Due Diligence
- Complete Settlement
- Live, Love, and Laugh in Your New Home
Step 1: Decide You Are Ready to Buy
The first step of the homebuying process is deciding you’re ready to buy. There are many reasons you might want to purchase a home. We’ve found there are three primary reasons people decide to purchase homes:
The Three Big Reasons People Buy Homes:
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Financial Benefits
- Appreciation
- Equity
- Saving vessel
- Profits from home sale
- Generational wealth
- Fixing costs
- Build stronger credit
- Tax Benefits
- Mortgage interest deduction
- Property tax deduction
- Tax write-offs
-
Emotional Benefits
- Stability: Owning a home allows you to develop roots and be able to create stability for yourself and your family.
- Freedom of choice: Owning a home allows you to have choices! You can truly make your home yours with customizations and design selections.
- Health benefits: The National Association of Realtors found that homeowners have a higher self-health rating compared to non-homeowners. An additional benefit in the study found that homeowners feel they have more control over their lives and higher self-esteem/happiness compared to renters.
-
Legacy
- Civic participation: Homeowners, on average, will own a home for 13 years as opposed to three years for renters. This creates a level of stability for a neighborhood. Homeowners tend to care more about their property and the surrounding areas, which can contribute to stronger neighborhoods and civic participation. Definitely a win-win for everyone!
- Inspiration: By purchasing a home, you are showing all those around you that it’s possible. If you are the first or tenth person in your family to buy a home. Now imagine how impactful you can be if you are the first member of your family buying a home. You can change the whole financial trajectory of your family because now they know they can do the same. The true impact of this is hard to measure, so we will leave that to you.
Whatever your reason is for buying a home, we think it’s awesome and would love to help!
Set up a call with one of our advisors today!
Step 2: Build Your Team — Agent and Lender
Once you decide you’re ready to buy a home, the next step is to build your team. Your team can make or break your experience when purchasing a home, so surrounding yourself with a great team is arguably the most important aspect of your homebuying journey. So who are the two key team members that you need? Number one, your real estate agent, and number two, your lender.
The Agent (Realtor and or Broker)
Your real estate agent will be with you from start to finish in the real estate purchasing process. Especially for first-time buyers, it’s your agent’s responsibility to share their knowledge with you. The sole purpose of this is to enable you to make an informed decision. Here is a quick breakdown of the responsibilities of a real estate agent:
Agent Responsibilities:
- Manage the whole homebuying process from start to finish for clients
- Keep track of all key dates
- Connect you with great vendors, from inspectors to settlement companies to contractors
- Schedule showings and show you homes within your criteria
- Review all offer documents with you
- Submit and manage the transaction process
If you work with a great agent, the home buying process can be extremely simple.
The Lender
Your lender is responsible for providing the needed funds to purchase a home outside of your down payment. Below are some additional aspects that great lenders handle:
Lender Responsibilities
- General financial guidance as it relates to buying a home
- Credit verification
- Appraisal order
- Finance processing
Step 3: Apply for a Loan “Get Pre-Approved”
Applying for your loan “Get Pre-Approved” can be one of the most stressful aspects of the homebuying process. That being said, what is always a surprise for first-time homebuyers is how little time it actually takes.
Most DC first time home buyers can submit all the documents they need for a pre-approval within 30 minutes!
The lender will need some simple information for your application:
- Tax return for the prior year
- Most recent paystubs
- Permission to pull your credit report
- Additional income information
Remember, the lender is not there to judge you or tell you that you can’t buy a home. It’s their job to ask “how can we get you qualified to get your dream home?”
Step 4: Complete a Buyer Consultation Call and Sign Buyer-Agency with Brokerage Compliance Documents
Buyer-agency agreements are extremely important. They lay out your relationship with your real estate agent, ensuring you have the proper representation throughout the whole homebuying process.
Each state and jurisdiction (e.g., DC, Maryland, and Virginia) all have slightly different requirements when it comes to buyer agency. The broker compliance and disclosure documents will also be completed at this time.
In general, a buyer-agency agreement contains the following information:
- Commission rate
- Term or length of agreement
- A protection period length
- Wire fraud notice
- Lead-based paint disclosure
Completing all these documents shouldn’t take longer than 30 minutes.
Step 5: Look at Homes
Congratulations — you’ve made it to one of the most fun aspects of the whole process: actually going to see homes!
During this part of the process, our clients usually see two to four homes before making a selection. The most important thing during this period is going in with established criteria. Your agent should be able to assist you with this.
When you’re building your criteria, there are three primary factors: price, size, and location, with condition as a key factor.
Price
When it comes to establishing your budget or price limit for a home, what really matters is not whether the home is $100,000 or $1 million — it’s your ability to comfortably cover that monthly payment obligation. We help ensure you’re comfortable by having a strong dialogue with your lender to ensure that the homes that were viewed meets your price limit.
Size
The size of the home is truly based off of your family’s needs. If you have children or are planning to someday, you want to take that into account when you’re looking at bedrooms. If you have visitors often, you might need a guest room, while if you don’t intend to spend much time in your home, you might be fine purchasing a studio. A lot of these questions are simple but important to ask.
Location
Location, location, location — you have probably heard that before. Location truly does matter in a profound way in real estate. You can either have an incredibly easy commute with amenities surrounding you, or you could opt to have a much longer commute but a larger home away from people.
Condition
The condition of your home is an incredibly important factor. There is a wide range of home conditions, from completely gutted renovations to brand new homes and homes that need complete renovations.
The key thing when determining your criteria is understanding how they all relate. Normally, what we tell our clients is your price is your price. We can’t change that because you only can afford what you can afford.
From there, you have to decide which two of these are more important to you: size, location, or condition. You can either have a very large home in great condition in an area that might not be central or you could opt for a small house in terrible condition in a very central location.
This, again, comes down to what your desires are.
Our goal is to avoid you burning out, so we always spend extra time analyzing your criteria so you don’t need to see 30 to 40 homes. Instead, our clients on average see 2-6 homes!
Set up a one-on-one consultation with one of our agents!
Step 6: Submit an Offer
Once you find the house you want to put in an offer on, having a strong team of a lender and agent really comes into play. DC is an incredibly competitive market, with homes selling after less than seven days on the market, on average, if they’re priced right.
So, although there’s a process laid out, expect some competition as you’re a DC first time home buyer.
Here are the steps to submitting an offer, with who is responsible for that task in parentheses:
- Tour the home (buyer, agent)
- Decide with your agent that you want to put in an offer (buyer, agent)
- Request the seller disclosures
- Reach out to the listing agent asking for the full status of the offer and what the sellers are looking for (agent)
- Pull together cost estimates from lender requested by agent (lender and agent)
- Draft offer documents (agent)
- Review offer documents (agent, buyer)
- Submit offer (agent)
If the offer is accepted, your due diligence period begins.
Step 7: Conduct Due Diligence
Your due diligence period is where you have an opportunity to really pull back the curtain and look at the home.
During this time, there’s going to be a lot of moving parts, but thankfully you will have a strong team around you to make this a seamless process for you.
The goal of the due diligence process is to ensure that our clients don’t have to ask for things to do; instead, we take a proactive stance so all you have to focus on is completing the items requested.
The normal sequence of the due diligence period is as follows:
- The offer is ratified (all parties agree to the terms)
- The contract is sent to the settlement company and lender by your agent
- All key dates are shared via calendar invite
- Escrow money (EMD) is deposited with the settlement agent
- Your agent will schedule your home inspection
- The lender will be processing the file and complete the underwriting process
- Complete the home inspection and request repairs
- The appraisal is ordered and completed by the lender
- Final walk-through
Once the final walk-through is done, it’s time for settlement. You are almost there!
Step 8: Complete Settlement
This is the day you have been waiting for! Settlement day is when you get to take ownership of your new home. Everything has been completed efficiently and effectively by your team, so all you’ll have to worry about on this day is signing the documents.
On average, settlement takes about an hour to complete, and involves you and the settlement attorney reviewing all the documents to verify two key items: yes, you know what house you are buying, and yes, you promise to pay back your mortgage.
Step 9: Live, Love, and Laugh in Your New Home (and Refer Friends and Family)
At this stage, you should be moved in and enjoying your new home! You’ve gone from a DC first time home buyer to officially a home owner.
When it comes to homeownership, sometimes questions and items that come up that you might not be familiar with.
This is why our team believes in maintaining relationships with our past clients throughout the ownership of their home. We also love hosting and bringing our clients together whenever we have a chance at events like wine tours and private dinners. So if you know of anyone in your network who is looking to buy or sell a home, we would love to be introduced to them.
If you’re a DC First Time Home Buyer, reach out to The Kree Team so that we can help walk you through this process.
